MARKET SUMMARY
Co-Working Spa e in Atlanta
2
Abstra t
The History…
A
tlanta has a vibrant history of startups. This history can be traced back to the establishment of the ATDC (Advanced Technology Development Center), the longest running incubator in the country, out of Georgia Tech. Interestingly, at the time, the “unofficial” epicenter was the Starbucks at 5th and Spring in Midtown Atlanta where forward -thinking entrepreneurs gathered together to hang out and build their ideas into companies. This Starbucks was the location in Atlanta that offered this integrated urban entrepreneurial corridor the opportunity to feed off of each other’s ideas and make things happen. Today, Atlanta is full of B2B startups catering to the needs of our Fortune 500 and 1000 companies. Currently, Atlanta is the home of 16 of the Fortune 500, which is the third largest concentration of Fortune 500 companies in the country. These startups have proudly been solving big company problems for years.
Atlanta is the home of 16 of the Fortune 500, which is the third largest concentration of Fortune 500 companies in the country.
While leaders in Atlanta are excited about where it is, many want to push to the next level. Successful founders, venture capitalists and even government officials believe that as far as Atlanta has come, it can go so much further. Local investors are now stepping up and have committed $150 million in capital specifically for Atlanta tech startups. The largest one being venture firm, TechOperators that has dedicated $100 million. The city of Atlanta and Mayor Kasim Reed took special interest in building up Atlanta’s startup community when they recruited Brian McGowan, formerly from the US Department of Commerce, who is further known as an active participant leading the effort in the state of California. Additionally Atlanta, has created a strong partnership with Georgia Tech most recently the two have finalized plans to build a $100 million super computer building. >> Keep Reading on Page 3 >>
www.WorkSpaceCapital.com
@WorkSpaceCap
404-771-3333
Hello@WorkSpaceCapital.com
3
Abstra t (continued)
I
n addition, past successful Atlanta startup founders have launched Atlanta’s co-working scene over the past few years. It started with Strong Box and others however, more recently, David Cummings, founder of Pardot, invested $12.5 million in Atlanta Technology Village which is 100,000 square foot co-working space north of Midtown in Buckhead. While this was obviously well-received and has been greatly successful, there certainly is a portion of the startup community that wishes it would have been established near the startup epicenter in Midtown instead of Buckhead. Additionally, Michael Tevani of Scoutmob fame, which is one of Atlanta’s most successful B2C startup companies, has made it his mission to bring more vibrancy to the B2C startup scene in Atlanta. Tevani has recently announced the development of Beltline and Company which is going to be a 36,000 square foot co-working space dedicated to B2C startups. Thanks to all of these efforts, Atlanta will be able to retain its top talent and keep them from leaving Atlanta to begin their startups in other areas such as California or New York City.
While the outlook for Atlanta startups looks bright, the only thing that looks brighter is the outlook for co-working spaces.
While the outlook for Atlanta startups looks bright, the only thing that looks brighter is the outlook for co-working spaces. Not only does Atlanta have this great startup scene it’s also known as a hub for freelancers, which is a very strong force in Atlanta due the city’s large concentration of creatives and media professionals. In the past these folks have worked from home or at coffee shops because working in a white-walled executive office suite would zap their creativity. A 2013 study conducted by NAIOP found that the largest community using co-working spaces was freelancers at 53% while entrepreneurs and small companies only made up 23%. The one thing that is missing in Atlanta is a significant and well- run coworking space in its startup epicenter.
Until now ...
www.WorkSpaceCapital.com
@WorkSpaceCap
404-771-3333
Hello@WorkSpaceCapital.com
Atlanta Co-Working Lo ations
4
2
6 1
3 8 4 5
CATEGORIES Proposed WeWork Site > 5,000 Square Feet < 5,000 Square Feet In Development
www.WorkSpaceCapital.com
9 7
THE SPACES C 1 2 3 4 5
Proposed WeWork StrongBox West Atlanta Tech Village Hypepotamus Opportunity Hub Kollective South
@WorkSpaceCap
6 7 8 9
Desk Atlanta Nex Atlanta Beltline & Company Flatiron
404-771-3333
Hello@WorkSpaceCapital.com
5
Lo ations / STRONGBOX WEST
AREA // GEORGIA TECH ESTABLISHED // 2009 SIZE // 6,500 square feet COST // $85 - $850 monthly
“We wanted to open a place where independents, freelancers, creatives, and startups could come together and co-exist & collaborate. My CoFounder and I are big believers in the creative and startup scenes.” - Rick Myers, Founder
The northwest Atlanta space is one of the city’s more casual and diverse startup hubs. While the companies here aren’t as tech-focused as its counterparts, they are an interesting assortment, ranging from software coders to food truck operators.
PRICING INFO
Premier Plan Deluxe Plan
Open Office
Price
$145
$225-$285
$300
Reserved Desk
No
Yes
8x10 Office
Conference Room
1 Day
2 Days
3 Days
Mail Service
No
Yes
Yes
Phone Line
No
No
No
Availability
Available
Full
Wait List
Amenities: free wi-fi, free parking, free coffee, full kitchen, lounge with TV and gaming.
www.WorkSpaceCapital.com
@WorkSpaceCap
404-771-3333
Hello@WorkSpaceCapital.com
6
Lo ations / ATLANTA TECH VILLAGE
AREA // BUCKHEAD ESTABLISHED // 2012 SIZE // 103,000 square feet COST // $300 - $2,600 monthly Established in 2013, the Atlanta Tech Village is a community of innovation powered by a 103,000 square foot building. The Village is designed for technology and technology-related companies that have a unique set of needs in their quest to change the world. Your workspace should be more than just a desk and a place to hang your hat — it should bring the community together, promote serendipitous interactions, and be a powerful tool for recruiting the best talent. The Village is designed as a campus for cool people doing cool things.
PRICING INFO
“There’s co-working space, but there really isn’t office space. With the Tech Village, there’s tons of demand out there for this type of creative space.” - David Cummings, Founder
Hot Desk
Reserved Desk
Private Room Private Suite
Price
$300
$400
$1,000
$2,500
Access
24 Hour
24 Hour
24 Hour
4 Hours
Conference Room*
2 Hours
2 Hours
1 Hour
1 Hour
Mail Service
No
Yes
Yes
Yes
Availability
Limited
Wait List
Wait List
Wait List
Amenities: fast internet access, kitchens stocked with snacks & Octane coffee, game rooms, lounges, free lunch Fridays, social gatherings, networking events, and more.
www.WorkSpaceCapital.com
@WorkSpaceCap
404-771-3333
Hello@WorkSpaceCapital.com
7
Lo ations / OPPORTUNITY HUB
AREA // DOWNTOWN ESTABLISHED // 2012 SIZE // 6,500 square feet COST // $85 - $850 monthly The space is located in the heart of downtown Atlanta, inside the 200 Peachtree building. The downtown location and easy access to Marta makes accessibility a main selling point.
PRICING INFO
Space for 1
Space for 2
Space for 3
Space for 4
Price
$100
$200
$300
$400
Conference Room
0
1 Hour
2 Hours
4 Hours
Mail Service
Yes
Yes
Yes
Yes
Phone Line
No
Yes
Yes
Yes
Availability
Available
Available
Limited
Limited
www.WorkSpaceCapital.com
@WorkSpaceCap
404-771-3333
Hello@WorkSpaceCapital.com
8
Lo ations / HYPEPOTAMUS
AREA // MIDTOWN ESTABLISHED // 2012 SIZE // 10,000 square feet COST // FREE (Run by Non-Profit)
Located in the Biltmore Hotel’s basement, Hypepotamus is the city’s only free startup center. Because of its open-door policy, the campus remains Atlanta’s most energetic space. While the atmosphere can be distracting, it’s a minot complaint given the space’s location on Tech Square, vibrancy, and interesting array of businesses.
“The next great wave of Atlanta companies will come from bringing coders, designers, entrepreneurs, and students together to create massive awareness, spark diverse collaborations, and facilitate peer-to-peer education.” - Scott Henderson, Executive Director
Can I really just show up for free? “Yes, we’re different. We’re open to the public Monday - Friday from 9am - 6pm and will stay open later to host events. Every entrepreneur, coder, designer, student, investor, and storyteller is invited to use our workspace. Feel free to grab any seat at out open tables in the main room, connect to the free wi-fi, say hello to those around you, grab a whiteboard, use our conference room and build out your idea.”
www.WorkSpaceCapital.com
@WorkSpaceCap
404-771-3333
Hello@WorkSpaceCapital.com
9
Lo ations / KOLLECTIVE SOUTH
AREA // DOWNTOWN ESTABLISHED // 2013 COST // $60 - $300 monthly
Located near downtown, Kollective South is Atlanta’s newest co-working space. Utilizing its unique “communi-TECH” centers, Kollective South focuses on collaboration for all walks of customers, from freelancers, small business owners, contracters, and students.
“We opened Kollective South to provide a collaborative workspace for entrepreneurs and creative professionals but also much needed technical classes for the local community.” - Sian Morson, Founder
PRICING INFO
1/4 Time
Part-Time
Full-Time
Price
$60
$150
$300
Conference Room
0 Hours
2 Hrs/Mnth
4 Hrs/Mnth
Mail Service
No
Yes
Yes
Availability
Hot Desk Only
Hot Desk Only
Hot Desk Only
Amenities: free coffee, free tea, free wi-fi, first access to variety of technical classes
www.WorkSpaceCapital.com
@WorkSpaceCap
404-771-3333
Hello@WorkSpaceCapital.com
10
Lo ations in Development
BELTLINE & COMPANY AREA // DOWNTOWN The up to 30,000 square foot space would house 100 to 150 people at capacity. In addition to working space and programming, such as speaker series and events, the facility could include an artist workshop — turning it into a destination for the general public.
FLATIRON AREA // OLD FOURTH WARD The development would include more than 36,000 square feet of collaborative workspace, and 5,600 square feet of boutique retail and entertainment space. Single desks and private suites would be rented on a monthly basis, giving tenants the flexibility to grow — or shrink — their office footprint as needed. Nijhawan hopes to team up with a local entrepreneur to help create industry specific programming for tenants.
www.WorkSpaceCapital.com
@WorkSpaceCap
404-771-3333
“All of the activity around startups in Atlanta is great, but the elephant in the room is that we have a nascent consumer scene that has no catalyst.” - Michael Tavani, Founder
“It’s important to create an environment that promotes interaction and sharing of ideas. We don’t sit in cubicles by ourselves and come up with great ideas.” - Arun Nijhawan, Founder
Hello@WorkSpaceCapital.com
11
Our Proposed Lo ation / WeWork Atlanta
1300 West Peachtree Street NW Atlanta, GA 30308 Constructed in 1950 as the headquarters of the John Hancock Life Insurance Company, this 89,000 SF five-story office building was purchased by the Arthritis Foundation and completely renovated in 1996. Located just south of 17th and West Peachtree Streets, the site has unparalled access to MARTA (directly across the street from Art Center Station), both Cobb and Gwinnett Transit Systems and I-75 and I-85 north and southbound. 1330 West Peachtree Street presents to a larger user the opportunity to own and brand its own building in the technology heart of south, Midtown Atlanta, with all that Midtown has to offer.
www.WorkSpaceCapital.com
@WorkSpaceCap
404-771-3333
Hello@WorkSpaceCapital.com
The S oop
12
October 10, 2013
Atlanta Chases its Silicon Valley Dreams
Hundreds of new companies and dozens of co-working spaces are making Atlanta a Southern startup hot spot
By Max Blau
than in other major cities. And so does the abundance of students from more than 50 metro academic institutions that provide startup companies with plenty of prospective interns and future employees. Over the past five years, many entrepreneurs have flocked from their home offices and coffee shop headquarters to co-working spaces. Access to most of these facilities is cheap or free. The workspaces are scattered throughout the city’s neighborhoods. There’s Strongbox West in northwest Atlanta’s Underwood Hills and NEX Atlanta in Grant Park. Two major spaces, Georgia Tech-affiliated incubator Advanced Technology Development Center and energetic newcomer Hypepotamus, feed off of Tech’s energy and resources. Westside arts epicenter the Goat Farm recently opened its doors to several tech startups. Each one includes a mix of first-time business owners and tech scene vets who want to become mentors and invest cash in an emerging scene. As Atlanta’s tech scene has galvanized, City Hall has rallied behind it. Mayor Kasim Reed has promoted major efforts such as the Govathon, a City Hall-themed hackathon; partnered with Georgia Tech on major developments; and says he’s devoted time out of his schedule to shine a light on the startup scene. Invest Atlanta, the city’s economic development arm, and Startup Atlanta, an independent nonprofit with the mission to bridge the gap between the city and startups, are also working to help spread the word, raise funding, and give individual entrepreneurs a boost. “In the next five years, I think Atlanta is going to be the dominant IT city in the Southeast,” Reed says. “What you’re going to see is a constant stream of investment between Atlanta and Silicon Valley.” While Atlanta has its signature startups — including email-marketing provider MailChimp and online deals service Scoutmob — not everyone’s convinced that the city’s startup scene can rival the nation’s best startup communities. Scoutmob co-founder Michael Tavani questions whether Atlanta can develop the vibrancy seen in cities like San
A
tlanta’s startup community has come a long way since David Cummings moved to the city 11 years ago. The Buckhead serial entrepreneur, considered one of the most important leaders in the city’s tech scene today, struggled to find a community of like-minded businesspeople back in 2002. Most events were limited to established startup founders in an “old boys’ network,” he says. “There really wasn’t a whole lot that was easy to get into as a newbie.” Last October, Cummings sold Pardot, his business-tobusiness marketing automation firm, for approximately $95 million and decided help the city’s burgeoning startup community. He purchased a five-story building off of Piedmont Road for $12.5 million and opened Atlanta Tech Village, a massive co-working space that’s currently home to more than 300 tech entrepreneurs. Less than a year after opening, it’s become the Southeast’s largest entrepreneurship center. Cummings’ facility represents one of numerous efforts that have united Atlanta’s startup scene, which has slowly started to garner national attention. Between 2007-2011, on average metro businesses registered more than 1,500 patents a year — 16th highest in the nation. The Kauffman Foundation, a major entrepreneur-focused nonprofit, ranked Atlanta as one of the country’s top 10 cities for entrepreneurial activity in 2012. Forbes recently included Atlanta in its list of the country’s “best cities for female founders” and PCWorld called it one of “America’s most tech-friendly cities.” Following the economic recession and the rise of social media, the demand for co-working facilities in Atlanta has exploded. The possibility of being one’s own boss or a leader in a small company became appealing to a growing number of ex-corporate hotshots, either burned-out or laid off, and ambitious twentysomethings unable to find jobs after graduation. While there’s often substantial risk involved, the possible rewards of founding the next Facebook, Google, or Amazon are even greater. Atlanta’s low living, office, and transportation costs make it easier to start a company here
www.WorkSpaceCapital.com
@WorkSpaceCap
>> Keep Reading on Page 13 >>
404-771-3333
Hello@WorkSpaceCapital.com
The S oop
13
Atlanta Chases its Silicon Valley Dreams << Continued from Page 12 << Francisco, New York City, and Austin. “You realize very quickly when you’re [in San Francisco] that Atlanta is in the minor leagues,” Tavani says. “It’s just small ball what’s happening [here]. We don’t have a ton of successful companies.” According to Tavani, Atlanta needs far more consumer-facing companies — it’s own Twitter, Instagram, or Foursquare. Hypepotamus Executive Director Scott Henderson thinks the city could benefit from more social media and app-based startups — the “sexy stuff,” he says — but he also points to the city’s current strengths in health care technology, B2B, marketing automation, e-security, and mobile technology. Rob Kischuk, founder of social marketing company Badgy, which received a high-profile $600,000 angel investment from Dallas Mavericks owner Mark Cuban, thinks the city’s startups benefit from Atlanta’s high concentration of large corporations. With 16 Fortune 500 companies and other major corporate offices located in the metro area, local entrepreneurs have helped larger international firms become more innovative and efficient. This past summer, AT&T opened up one of its $3 million Foundry innovation centers to harness the capabilities of many Atlanta developers, investors, and startups under one roof. “Atlanta [startups] are very good at facilitating those transitions in technology that affect corporate America,” Kischuk says. There’s hardly a consensus of what defines Atlanta’s startup scene, as Tavani’s, Henderson’s, and Kischuk’s various takes reveal. Not having a cohesive identity can impact how much venture capital funding and angel investments are available to Atlanta startups. In the last year, Silicon Valley-based companies raised more than nine times more cash than the entire South. The situation has prompted some companies to leave Atlanta. Morehouse College alum Gerard Cannon moved Ballers Bridge, his tech startup focused on helping high school prospects connect with colleges, to the Bay Area. He and his partners struggled to raise cash and find mentors in their hometown after founding the company in 2011. So they headed West. “I was constantly told that I should move to Silicon Valley if I wanted to raise money,” he says. “The culture really needs to change.” Other Atlanta entrepreneurs think fundraising struggles
www.WorkSpaceCapital.com
@WorkSpaceCap
have slowly faded. Reed says more than 50 local startups have received VC funding. That includes Internet security startup Ionic Security. In April, it turned heads with a $10 million raise from big-time Silicon Valley VC fund firm Kleiner Perkins Caufield & Byers and Google Ventures, the Internet titan’s VC fund. Sam Zebarjadi, co-founder and CEO of Medicast, thinks the pressure to relocate out West to raise cash has significantly died down. “Five years ago, it was Silicon Valley or bust,” he says. “It used to be said that you couldn’t raise money and stay here. I think that’s been proven false in the last year,” says Jen Bonnett, founder of the female-focused business accelerator StartupChicks and an ATDC community leader. One idea that’s becoming increasingly popular with Atlanta tech leaders is for the city to follow its own path instead of imitating other successful cities. How does that happen? Startup Atlanta Executive Director Bess Weyandt thinks the city needs to “throw the Silicon Valley comparisons out the window.” Meanwhile, Cummings wants to help more startups reach the $1 million annual revenue mark. It’s a concrete goal, he says, that leads to more jobs and funding opportunities. At that point, companies have a higher chance of attracting potential buyers who’ll pay entrepreneurs money, which can be reinvested locally. Henderson and Tavani think the road to a stronger local startup scene is all about giving back upon cashing out: create new companies, hire more employees, and found co-working spaces. That means more people like Cummings or National Builder Supply co-founders Heath Hyneman and Kevin Wallace, who along with Marcus Morgan last year launched Hypepotamus with their own cash, taking initiative. “People who make money off companies they built [need to] reinvest back into up-and-comers,” Henderson says. Whether that happens could determine where Atlanta’s startups head next. To a degree, it requires individual founders to buy into the community’s larger mission, which may require sacrifices for the community’s improvement. Mark Feinberg, who co-founded the crowdfunding platform Uruut, wants a lot of things for his company that Atlanta doesn’t offer. As he tries to convince investors to pump approximately $1.5 million into his startup, he acknowledges that Atlanta may pale in comparison right now to resources in Denver, Austin, or Silicon Valley. But he insists that Uruut will stay put as he helps build something bigger. “I’m all in on Atlanta,” Feinberg says.
404-771-3333
Hello@WorkSpaceCapital.com
The S oop
14
March 21, 2014
15 years after the dot com bust, startup fever returns to Atlanta By Urvaksh Karkaria
S
corched by the dot-com bust, investors — venture capital and angel — abandoned early-stage investing with the swiftness of a fair-weather Falcons fan. Startups with no revenue — and often no product — were seen as not worth the hassle. Fifteen years is a long time. Memories of imploding portfolio companies are being washed away by valuations frothier than Dom Perignon. Billion-dollar exits for capital-light Web startups (think Instagramand Whatsapp) have investors bellying back to the bar. Startup fever is extending beyond the borders of the tech Shangri-La that is Silicon Valley. The excitement is palpable even in Atlanta — a town better known for M&A and CRE dealmaking. In the past 15 months, several Atlanta early-stage funds have been announced, promising to put more than $150 million in capital to work. The new funds will help plug a historical weakness — early-stage capital — that has kept Atlanta’s tech industry from realizing its potential.Georgia Tech’s Enterprise Innovation Institute estimates that 92 cents of every venture capital dollar invested in Georgia companies comes from out of state. Having access to a deeper pool of local capital means Atlanta tech startups will be able to adjust their businesses faster. More capital will encourage startups to “fail fast and fail often,” said Adam Ghetti, chanting the oft-repeated Silicon Valley mantra. “More capital will mean more failures — the trick will be to recognize them as early as possible and refocus the teams and capital,” said Ghetti, founder of Ionic Security Inc., which raised $25 million from Kleiner Perkins Caufield & Byers, Google Ventures and Atlanta’s TechOperators this year. That deal reportedly valued the three-year-old startup at nearly $100 million. Early-stage capital has a multiplier effect on building the next generation of tech companies. “More money means more companies will get funded at the critical early stages, which will give some of them a greater likelihood of becoming profitable, or achieving growth milestones necessary to attract future capital,” said Glenn
www.WorkSpaceCapital.com
@WorkSpaceCap
McGonnigle, general partner at TechOperators, an early-stage venture firm. Local investment at the seed stage also increases the likelihood the company stays and grows in Atlanta. “We know that entrepreneurs will relocate to other states, if necessary, to secure funding,” McGonnigle said. “However, once a company has raised their first round from a local venture firm, they are very unlikely to relocate out of Georgia.” Yet, the surge in capital threatens to exacerbate the “zombie” startup problem, where half-baked ideas limp along, fueled by inexperienced investors and community cheerleaders. The Atlanta tech ecosystem’s problem is it’s “too darn nice,” serial entrepreneur Paul Judge proclaimed. “We try to make it so that everybody can have a startup.” Silicon Valley churns out two or three billion-dollar companies a year, while Atlanta produces one a decade, Judge said. He suggests devoting capital and other resources to backing a few of the most promising startups. “We’re like Little League, where everybody gets a trophy,” Judge said. “Nobody’s having a conversation of ‘Who’s the next billiondollar company?’ ” While Atlanta lacks the flashy billion-dollar exits that Silicon Valley business-to-consumers startups can pull off, the region’s business-to-business startups have pulled off respectable exits, such as SecureWorks($612 million), Vitrue Inc.($330 million) and Vocalocity($130 million). “We may not hit our home runs as far as funds in Silicon Valley, but our batting average will be much higher,” said Jamie Hamilton, who is raising a $20 million fund aimed at early-stage tech companies. Unmet need or herd mentality? A confluence of factors — which extend far beyond the Midtown and Buckhead startup enclaves — is fueling investor interest in Atlanta startups. While seed-stage investing is the highest risk, technology advancements are deleveraging some of that risk. The cost of software and mobile development has plummeted. Startups today subscribe to low-cost Amazon Web Services (a suite of cloud-based services), instead of investing in expensive >> Keep Reading on Page 15 >>
404-771-3333
Hello@WorkSpaceCapital.com
The S oop
15
March 21, 2014
15 years after the dot com bust, startup fever returns to Atlanta << Continued from Page 14 << servers and storage equipment. People can build companies for a fraction of the cost it took, even two years ago, said Doug Spear, head of the emerging growth and venture capital practice at Nelson Mullins Riley& Scarborough LLP’s Atlanta office. “If you’re an investor, your risk goes down, because that early-stage [investment] can go further,” Spear said. A soaring equities market has freed up cash and buoyed investor confidence in riskier (and higher-return) asset classes, such as venture capital, Judge said. Accelerating valuations and stock market returns drive IPO activity — 85 venture-backed companies went public last year, the highest number since 2000, according to the MoneyTree Report. A strong IPO market increases the paths to a liquidation event. “Now you can be acquired, or you can go public,” said Judge, chairman of Pindrop Security, which raised nearly $12 million from Citigroup and Andreessen Horowitz. Some of the new capital directed at startups is flowing from entrepreneurs who have had successful exits and are reinvesting. Consider David Cummings, who sold his marketing automation firm, Pardot, for $95 million in 2012. Since then, Cummings has plowed a portion of that windfall into building infrastructure — capital and tech space — to nurture tomorrow’s tech industry. TechOperators, backed by entrepreneurs with billion-dollar exits, is raising a $100 million fund aimed at early-stage companies. TechOperators launched its first fund in 2008. Media headlines and lofty valuations have drawn the attention of more established venture firms that typically do later-stage deals. “The big venture firms have realized that if you don’t get in on a hot company earlier, you may never get in,” said Jeff McConnell, CEO of Whisper Communications, a Georgia Tech mobile security spinoff. As more angel investors coalesce into groups, their financial ability to do seed-stage rounds and have sufficient dry powder to do follow-on rounds have caused venture firms to do earlier-stage deals, so they are positioned to make the Series A
www.WorkSpaceCapital.com
@WorkSpaceCap
and B bets, McConnell said. Some growth-stage venture firms are swimming downstream, following the scent of opportunity. “It’s harder to find good growth equity deals where you can put a lot of money to work,” Spear said. The surge in fundraising means that, for the first time, there will be competition in Atlanta for early-stage deals. That competition is good for startups, because it helps drive valuations and forces investors to do more than write checks. “In Atlanta, the person with the checkbook was in control,” Judge said. “That’s not the case in the Valley, where investors have to fight to get into good deals.” Attorney Jeffrey Leavitt shrugs off concerns of a “herd mentality” taking over startup funding in Atlanta. There isn’t a sufficiently large, or efficient, market for earlystage capital to drive that kind of a rush, said Leavitt, who heads the tech practice at law firm DLA Piper LLP’s Atlanta office. The recent fundraising is “a genuine and legitimate recognition of a market need,” he said. Even with the additional early-stage capital available, Atlanta’s ratio of such capital to large company generation sources is still too low, Leavitt said. “The capital is desperately needed to fund lots of the new startups germinating in local new company breeding grounds,” he said. “Lots of great ideas have not had sufficient funding in recent years.” Judge likens today’s fundraising fervor to the condo market in the mid-2000s. “We are overbuilding seed funds to an extent,” he said. Atlanta’s startup industry isn’t plagued by a capital shortage, as much as by a shortage in truly fundable companies, some argue. The “walking zombies” shouldn’t be kept on life-support, “because they are eating up good engineers,” Judge said. Instead of trying to build 600 startups in Atlanta, the city ought to focus on building five more blockbusters such as Internet Security Systems ($1.6 billion) or AirWatch ($1.5 billion), he said. “Money follows great people working on big problems,” Ghetti added. “Atlanta is full of great people, but a lot of them are working on small problems.”
404-771-3333
Hello@WorkSpaceCapital.com